BP plans to fight OSHA punishment over refinery safety

OSHA punishes BP over safetyRegulators cite lack of upgrades since fatal Texas City blast and more violations

TOM FOWLER, HOUSTON CHRONICLE |
October 30, 2009

More than four years after an explosion at its Texas City refinery killed 15 workers, BP still hasn't made required safety upgrades, has committed new safety violations and should pay a record $87 million in fines, federal regulators said Friday.

The London-based oil giant said it will contest the allegations and the fine, and that it has met the terms of a previous settlement agreement involving the 2005 blast. In unveiling the proposed fines, the U.S. Occupational Safety and Health Administration said the company had not completed all the safety upgrades required under the agreement. OSHA also alleged 439 new “willful” safety violations, chiefly related to pressure release devices at the plant.

“We don't need to see the loss of another life there,” Labor Secretary Labor Hilda Solis said in a news conference. “Our motto is we would like to see people go into work and be able to come home to their families.”

BP says it has been in constant contact with the regulators over the work related to meeting the terms of the settlement but that the new allegations were first revealed to the company Thursday night. It is challenging all the claims.

“We continue to believe we are in full compliance with the settlement agreement, and we look forward to demonstrating that before the review commission,” BP Texas City refinery manager Keith Casey said in a statement.

The March 23, 2005, explosion, which killed 15 and injured scores more, occurred after a piece of equipment called a blowdown drum overfilled with flammable liquid hydrocarbons. The excess liquid and vapors were vented and ignited. Alarms and gauges that were supposed to warn of the overfilled equipment did not work properly.

Under its 2005 settlement with OSHA, BP committed to pay $21 million and agreed to fix safety problems and comply with the law.

In a separate settlement with the Department of Justice, BP pleaded guilty to one violation of the federal Clean Air Act, agreed to pay a $50 million fine and to make safety upgrades to the plant. Complying with the terms of the OSHA settlement was also a condition of the Justice Department agreement.

Blast victims challenged the plea deal, arguing among other things that the fine was inadequate given BP's finances. The company reported 2008 profit of $21.2 billion.

The Department of Justice said that it is reviewing the allegations in OSHA's filing and “will take all appropriate actions to ensure the plea agreement is not violated.”

In an Oct. 5 letter to OSHA outlining many of the issues in question, attorneys for BP argued that it was never their understanding that all of the settlement work would be completed by September of this year, but rather some of the actual equipment installation would happen as certain units were brought down for maintenance.

The letter says OSHA officials didn't indicate possible objections to that approach until December 2008 and gave no written notice until August.

Other issues related to interpretations of what constituted “recognized and generally accepted good engineering practices” in the use of certain equipment and interpretation of the requirements of third-party consultants who were auditing the work, according to the letter.

OSHA rejected BP's request to modify the terms of the settlement to allow for later completion of the work, saying the company had no valid reason for the changes.

New alleged violations

For not complying with the terms of the settlement agreement, BP was issued 270 “notifications of failure to abate” with proposed fines totaling $56.7 million. Each notification represents a penalty of $7,000 times 30 days, the period that the conditions have remained unresolved, OSHA said.

About $30.7 million of the fines proposed Friday was for 439 new alleged violations involving failures to follow industry-accepted controls on the pressure relief safety systems and other process safety management violations.

Mike Wright, head of the health and safety department at the United Steelworkers, which represents workers in Texas City, said he would not prejudge BP's guilt or innocence in the case and plans to be represented in the formal appeals process.

But the dispute has helped put a national spotlight on safety in the oil industry, an issue the union has been trying to alert regulators to for years, he said.

“I hope this serves as a wake-up call for the entire industry,” Wright said.

OSHA could take measures to shut down the facility if it thought there were an imminent threat, but it has no plans to do so, said Dean McDaniel, OSHA's regional administrator in Dallas.